Skip to main content

What Is Escrow and How Is It Figured?

Many customers choose to escrow or add to their payment, the cost of other related items to ensure these items are paid in full and on time.

The escrow portion of your payment can include:

  • The real estate taxes for the property
  • The hazard insurance premium
  • Private mortgage insurance
  • Life and/or disability insurance

At the closing of your loan, you will receive an initial escrow disclosure. This disclosure displays an anticipated year of activity which includes the monthly payment, disbursements to pay your taxes and insurance, and a running balance on the account. An initial escrow deposit is collected at your loan closing to open your escrow account as shown on the disclosure. The bank is also allowed by law to maintain a two-month escrow reserve in case your taxes or insurance should increase. Annually you will receive an analysis of your escrow account. The analysis will list the past year’s payment and disbursement activity as well as the running balance. The analysis will also include the same history but for the following year. The annual analysis will determine if there is a sufficient balance in your account. Your account may have an overage or a shortage. If you have an overage that will be refunded back to you if it exceeds $50. If your account has a shortage that will be collected over 12 months if it exceeds one month’s escrow deposit. Also, the monthly escrow payment will be adjusted as a result of the analysis.

CNB requires that you escrow for your taxes and insurance if you do not have 20% equity in your property; otherwise, it is optional.

View more Articles

General Disclaimer
While we trust you’ll find value in this content, it’s important to view it as a starting point. For personalized guidance tailored to your unique circumstances, we strongly advise consulting with a qualified professional who holds the necessary licenses. This article, along with any associated resources, should not be interpreted as legal or financial advice. While efforts were made to ensure accuracy at the time of preparation, we cannot guarantee its current relevance.

Citizens National Bank does not warrant or represent the accuracy, applicability, completeness, or suitability of the information provided. Citizens National Bank explicitly disclaim any responsibility for the use or misuse of these materials. By accessing this site, you agree to absolve Citizens National Bank from any associated liabilities. Exercise caution and seek professional advice before making any financial or legal decisions based on the information provided here.

Chat Online